Volga-Dnepr Group, GECAS reveal freighter appetite at Farnborough

In another string of significant developments from the Farnborough International Airshow, Volga-Dnepr Group and its UK-based affiliate CargoLogicHolding today signed several agreements with Boeing, including a letter of intent to purchase twenty-nine 777 freighters and an order for five 747-8 freighters. Separately, GECAS announced it had reached an agreement with Boeing for additional 737-800BCF conversions with a firm order for twenty and options for an additional fifteen.

Volga-Dnepr Group, through its airline AirBridgeCargo, operates five 747-400ERFs, two 747-400FSCDs, and eleven 747-8Fs, while CargoLogicAir operates three 747 freighters – one each of 747-400ERFs, 747-400FSCDs, and 747-8Fs. There have been some concerns of late overthe future of the freighter, but Volga-Dnepr President and CargoLogicHolding Chairman Alexey Isaykin stressed the unique position the production freighter serves in the air freight market, given its cargo-loading and carrying ability via nose-loading of oversized cargo. “We are true believers in the 747-8 Freighter, it is a very special airplane. We fly it every day and we understand why operators around the world want more of them,” Isaykin said. The 747-8F order amounts to about $2 billion in list prices.

Turning to the LOI for twenty-nine 777Fs, the possibilities for the Volga-Dnepr Group airlines are even more interesting, if also less sure. Isaykin said the airlines would aim to “open new market opportunities with the 777 freighter, the world’s longest-range twin-engine cargo jet,” potentially signaling that likeotherairlines adding 777Fs to their fleets, Volga-Dnepr Group could be planning to take advantage of robust cross-border e-commerce growth via long-haul flights, with Moscow serving as a potential hub.

However, whether today’s LOI will materialize in actual aircraft deliveries is unclear. Of the twenty 747-8Fs Volga-Dnepr committed to acquire under a 2015 memorandum of understanding, onlysix were delivered, meaning the order for five announced today would still amount to nine fewer than expected from the 2015 MoU. Given the $9.8 billion price tag the 777F orders would command – and the lack of clarity around exactly where those aircraft would operate in a network currently not operating with any of the airframe type – how many 777Fs Volga-Dnepr will actually acquire remains to be seen.

Looking now to narrowbody freighters, today during the Airshow, GECAS announced it had reached an agreement with Boeing for additional 737-800BCF conversions with a firm order for twenty, and options for an additional fifteen. The lessor’s order book for 737-800BCFs now stands at thirty-five firm orders plus options for an additional fifteen. GECAS became the launch customer for Boeing’s conversion program in February 2016 when it placed a five-unit conversion order. This order followed an earlier order for “up to twenty” 737-800 conversions with AEI in June 2015.

Last June, GECAS announced it “planned to more than double its orders for 737-800 passenger-to-freighter conversions,” which at the time stood at twenty-five units (five with Boeing, and up to twenty with AEI). With orders and options for up to seventy conversions, today’s order has certainly increased GECAS’ commitment to the airframe. Earlier this year, Sweden-based West Atlantic took redelivery of the first freighter-converted 737-800BCF and has since put it into service in FedEx’s European network. West Atlantic agreed to lease at least three more 737-800BCFs from GECAS. The AEI-converted 737-800SFs, meanwhile, will go to launch operator Ethiopian Airlines.

As for the operators of GECAS’ forthcoming freighters, there are a number of possibilities – both newcomers and familiar faces. Volga-Dnepr for one announced its intention to introduce 737-800BCFs. Volga-Dnepr’s AirBridgeCargo already leases two 747-400ERFS and a 747-8F from GECAS. Another possibility that would not surprise Cargo Facts would be to see an operator lease 737-800Fs to put into service for e-commerce giant Amazon. It is also widely believed that Amazon issued an RFP in Europe and is considering an expansion of its ad-hoc air operations in the region.